If you’re renting a commercial property in the UK, your business rates bill is probably one of the biggest fixed costs you’ll face — and one of the hardest to predict. Over the years I’ve covered this topic, the same question keeps coming up from tenants: “How do I know if I’m paying the right amount, and what can I actually do about it?” The answer is rarely straightforward, because the system is about to change in a significant way.
That figure — £500,000 — is the new dividing line. From April 2026, properties with a rateable value (RV) above that threshold will face a higher multiplier, while retail, hospitality and leisure (RHL) properties below it will benefit from permanently lower rates. For anyone renting commercial space, understanding where your property sits in this new structure is the difference between budgeting accurately and getting a nasty surprise. Here’s what you actually need to know.
If you’re currently negotiating a lease, it’s worth understanding how rates fit into the bigger picture of your rental agreement. I’ve covered the practical side of negotiating commercial leases separately, but the rates piece is something you need to get right before you sign anything.
How business rates actually work for tenants
The most important thing to understand is that business rates are a tax on the property, not on the business itself. As a tenant, you’re usually the one who pays them — either directly to the local council or indirectly through your rent if the lease is on an “inclusive” basis. The amount you pay depends on two things: your property’s rateable value (set by the Valuation Office Agency) and the multiplier (set by the government each year).
What I’d tell any tenant is this: don’t assume the RV on your bill is correct. The VOA uses broad rental evidence, and it’s not uncommon for individual properties to be overvalued. If you’re renting a space that’s smaller, less accessible, or in a weaker part of town than the VOA’s benchmark properties, you may have grounds to challenge. The key is to check your RV against comparable properties in your area before the revaluation takes effect.
What the 2026 changes mean for your rent and your budget
The 2026 revaluation is the biggest shake-up to business rates in years, and it will affect tenants differently depending on their sector and location. The new multiplier structure is designed to shift the tax burden away from high-street businesses and onto larger properties — particularly the distribution warehouses used by online retailers. But the impact on your individual bill will depend on how your property’s RV changes in the revaluation.
Here’s the scenario that matters most: if you run a small shop or café with an RV below £51,000, you’ll move onto the new “small business RHL multiplier” from April 2026. That’s a permanent lower rate, replacing the old system where relief had to be renewed each year and created what the government itself called a “yearly cliff-edge”. For a typical small retailer, that could mean a noticeably lower bill — but only if your RV doesn’t increase significantly in the revaluation.
On the other hand, if you’re renting a large office or warehouse with an RV above £500,000, you’ll face the new high-value multiplier. The government has said the rate for this multiplier cannot be more than 10p higher than the standard multiplier rate, but even that difference could add thousands to your annual bill. What I’d do in that situation is start modelling the potential increase now, so you can factor it into your rent negotiations or budget forecasts.
It’s also worth noting that the revaluation itself will redistribute the tax base. According to Knight Frank, businesses in sectors where rental values have risen sharply between 2021 and 2024 — such as logistics and data centres — are likely to see their RVs increase, while those in weaker markets could see reductions. The key point is that the revaluation is not designed to raise extra revenue; it’s meant to keep the system fair by reflecting changes in the property market.
Where tenants get caught out — and how to avoid it
I’ve seen the same mistakes come up again and again when tenants deal with business rates. Here are the most common ones, and what to do instead.
Assuming the rateable value is fixed and final
Many tenants accept the RV on their bill without question. But the VOA’s valuations are based on broad rental evidence, and they can be wrong for individual properties. If you think your RV is too high, you can challenge it through the Check, Challenge, Appeal process. The catch is that you need to do it promptly — ideally within months of the new rating list being published. Waiting until your bill arrives could mean you’ve missed the window.
Not checking whether your property qualifies for RHL multipliers
From April 2026, only properties that meet the definition of retail, hospitality or leisure will qualify for the lower multipliers. The government has said it intends for the scope to “broadly reflect” the existing RHL relief, but the exact eligibility criteria will be set through secondary legislation. If you’re in a borderline sector — say, a gym that also sells retail products, or a café that’s part of a larger office building — you need to check whether you’ll qualify. What I’d do is look at the current RHL relief criteria and see if your property would have qualified under that system. If there’s any doubt, speak to a rating surveyor.
Ignoring the revaluation date
The 2026 revaluation is based on rental values from 1 April 2024. That means your new RV reflects market conditions from two years ago, not today’s rents. If your area has seen rents fall since 2024, you might be paying too much. Conversely, if rents have risen, your RV might be lower than current market rates — which is good news for your bill, but could complicate things if you’re negotiating a new lease. The key is to understand the valuation date and how it affects your property.
Forgetting that the multiplier is only half the story
Your business rates bill is calculated by multiplying your RV by the multiplier. But the multiplier itself changes each year, and the government can also introduce transitional relief to cap how much your bill can increase or decrease. That means a change in your RV doesn’t always translate directly into a change in your bill. If you’re budgeting, don’t just look at the RV — look at the actual bill and any relief schemes that apply.
If you’re unsure about your property’s classification or the challenge process, it’s worth getting professional advice. A tenant landlord lawyer can help you understand your rights and obligations under the lease, particularly if the rates clause is unclear.
→ Scroll right to see all columns
| Property Type | Rateable Value | Multiplier from April 2026 |
|---|---|---|
| RHL (retail, hospitality, leisure) | Below £51,000 | Small business RHL multiplier (lower rate) |
| RHL (retail, hospitality, leisure) | £51,000 – £499,999 | Standard RHL multiplier (lower rate) |
| Non-RHL (e.g. offices, warehouses) | Below £51,000 | Small business multiplier (existing rate) |
| Non-RHL (e.g. offices, warehouses) | £51,000 – £499,999 | Standard multiplier (existing rate) |
| All properties | £500,000 and above | High-value multiplier (higher rate) |
How to prepare for the 2026 revaluation — a practical guide
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The 2026 revaluation is coming whether you’re ready or not. Here’s what you can do now to make sure you’re not caught off guard.
Check your current rateable value against comparable properties
Start by looking up your property’s RV on the VOA’s website. Then find comparable properties in your area — similar size, location, and use — and see what their RVs are. If yours is significantly higher, you may have grounds to challenge. The VOA publishes a full list of RVs for all non-domestic properties after each revaluation, so you’ll have the data you need. What I’d do is create a simple spreadsheet with the properties you’re comparing, their RVs, and any differences in size or condition. That gives you evidence to work with if you decide to challenge.
Understand your lease’s rates clause
Not all leases handle business rates the same way. Some are “gross” or “inclusive”, meaning the rent covers the rates. Others are “net”, meaning you pay the rates separately. If you’re on a net lease, any change in your rates bill directly affects your costs. If you’re on an inclusive lease, the landlord may try to pass on increases through a service charge or rent review. Read your lease carefully — or better yet, have a property lawyer review it — so you know exactly who bears the risk of rates changes.
Model the impact of the new multipliers
Once you know your property’s likely RV after the revaluation, you can estimate your bill under the new multiplier structure. For RHL properties below £500,000, the new multipliers will be lower — but the exact rates won’t be announced until Budget 2025. For properties above £500,000, the high-value multiplier will be higher, but capped at 10p above the standard rate. Use those ranges to create a best-case and worst-case scenario for your budget. If the worst case is unaffordable, start planning now — whether that means negotiating a rent reduction, downsizing, or challenging your RV.
Watch for the transitional relief scheme
The government has said it will support ratepayers who see large bill increases as a result of the revaluation. The details of the transitional relief scheme will be announced at Budget 2025, alongside the final multiplier rates. If your bill is set to jump significantly, transitional relief could phase in the increase over several years rather than hitting you all at once. Keep an eye on the announcements and make sure you apply for any relief you’re entitled to.
Consider challenging your RV if it’s wrong
If you believe your new RV is incorrect, you can challenge it through the Check, Challenge, Appeal process. The first step is “Check” — you review the VOA’s valuation and provide any missing or incorrect information. If you’re still not satisfied, you move to “Challenge”, where you formally dispute the valuation. If that doesn’t resolve it, you can “Appeal” to the Valuation Tribunal. The process can take months, so start early. A rating surveyor can help you build a strong case, but their fees need to be weighed against the potential savings.
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1Check your RV on the VOA websiteLook up your property’s rateable value and compare it to similar properties in your area. Note any discrepancies in size, condition, or location.
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2Review your lease’s rates clauseDetermine whether you pay rates directly or through your rent. If the clause is unclear, get a property lawyer to interpret it.
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3Model your bill under the new multipliersUse the estimated RV and the likely multiplier range to calculate your bill from April 2026. Create best-case and worst-case scenarios.
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4Watch for Budget 2025 announcementsThe government will announce final multiplier rates and transitional relief details at Budget 2025. Apply for any relief you’re entitled to.
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5Challenge your RV if necessaryIf you believe your RV is wrong, start the Check, Challenge, Appeal process promptly. Consider hiring a rating surveyor for complex cases.
Frequently asked questions
Can my landlord pass on a business rates increase to me? ▾
What happens if I challenge my RV and lose? ▾
Do I pay business rates on an empty property I’m renting? ▾
Will the 2026 revaluation affect my rent? ▾
What’s the difference between the small business multiplier and the RHL multiplier? ▾
If this was useful, you might also want to read Understanding Shared Retail Lease Agreements in the UK.
Sources and Further Reading
Essential Insurance Tips for Renting a Commercial Space in the UK — A practical guide to the insurance cover you need when renting commercial property, including how it interacts with your rates liability.
Business Rates Forward Look. HM Government, 2025.
2026 Business Rates Revaluation Guide. Knight Frank, 2025.
Business Rates Revaluation 2026 Handbook. Montagu Evans, 2025.
